How to Get an Insurance Agent License in Texas

Published: Jun 21, 2019
texas insurance agent license

 

Are you considering a professional path as an insurance agent in Texas? To realize your business endeavor, you will first need to undergo a list of obligatory administrative steps.

You will have to obtain a Texas insurance agent license from the Department of Insurance. By doing this, you will receive the legal right to operate in the state. The process entails meeting a number of requirements, whose goal is to ensure you are suitable to run an insurance agency. Among them is posting an insurance broker bond.

In the sections below, you can get acquainted with the essentials about obtaining the required license and bonding, so that you can launch your business smoothly.

The Texas insurance agent license requirements

Your first step in kickstarting your venture is to get familiar with the legal framework in Texas. The licensing body for insurance agents in the state is the Department of Insurance. The main legislation that governs insurance agents is the Texas Insurance Code.

You can obtain a number of different types of licenses from the Department, depending on the exact activities of your company:

  • General Lines-Life, Accident & Health
  • General Lines-Property & Casualty
  • Life Insurance Not Exceeding $25,000
  • Life and Health Insurance Counselor
  • Personal Lines Property and Casualty
  • Surplus Lines
  • Life
  • Risk Manager
  • Managing General Agent
  • County Mutual
  • Funeral Prearrangement Life
  • Limited Lines

For each license type, you have to fill in a separate application form and mark the respective type that you are applying for. If you want to obtain a Surplus Lines license, you must already have a current General Lines-Property & Casualty license or a current Managing General Agent license.

Then you have to provide proof that you meet the various criteria set by the Department. This entails the following:

  • Information on the business entity (corporation, partnership, depository institution or farm credit administration)
  • EIN number
  • Business and personal information
  • Answers to screening questions
  • Biographical data and fingerprinting for each responsible individual
  • Texas Franchise Tax Certificate of Good Standing or a copy of the No Nexus Letter (in some cases)
  • Proof of financial responsibility (not applicable for Surplus Lines applicants) in the form of a $25,000 insurance agency bond or an Errors & Omissions (E&O) Certificate of Insurance (a minimum of $250,000 with a deductible of not more than 10 percent of the full amount of the policy)

You will also need to pass an exam proving your knowledge in the field. The exact requirement for testing varies depending on your intended license type.

The licensing fee is $50, which also applies to renewals. If your license has expired for more than 90 days but less than a year, the fee is $75. For each license, you have to pay a $10 notice of appointment fee as well.

Obtaining a surety bond

texas insurance agent license

In order to get your state license as a Texas insurance agent, you have to provide proof of financial responsibility. This can be done via posting a surety bond or by providing an E&O insurance policy.

A common choice for many applicants is to post an insurance agent bond in the amount of $25,000. You have to use the official bond form when supplying it to the Department. The purpose of the bond is to guarantee that you will conduct your operations as an insurance agent in the state in full compliance with the Texas Insurance Code. It can be used as a protection mechanism in case you transgress from the law, in which case, harmed parties can demand reimbursement through a bond claim.

The bonding process entails that you cover a small percentage of the required bond amount. It is typically between 1% and 5% of the total, and is called the bond premium. This is your actual price, which is based on the strength of your personal and business finances. If they are in good shape, you can expect a bond premium as low as $250 to $750 for a $25,000 bond.

Need further help with your licensing and bonding process as a Texas insurance agent? Our bonding experts can be reached at 877.514.5146.

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.